The Proposed School Modernization Plan In Context

Education Chairman Grosso has called for a significant rethinking of the Mayor’s proposed Capital Improvements Plan (CIP) for schools and has asked for input on proposed criteria for making modifications to it. Seehere.

Given the number and distribution of schools facing delayed modernizations, budget busting projects like that for the Duke Ellington School for the Arts and the constraints on making additional investments due to our debt cap, it is essential that we step back, consider priorities and ensure we invest our tax dollars wisely, and equitably.

(The linked Workbook provides background data and charts to support analyses of where we are at and the constraints we face. The most efficient way to use the Workbook is to access it through the link and download it.)

The Decline in School Investment and the Rising Costs

The Mayor calls for $6,183,687,000 in capital investment over six years (seeWorkbook at Tab 1 (showing proposed capital investment by year taken from the relevant CIPs) and here at 6-4), down 5% from the $6,506,862,000 in the six year plan last year (seeWorkbook at Tab 1 and here at 6-4).

The Mayor’s allocation for schools is $1,268,587,000 (see Workbook at Tab 1 and here at 62 GAO), down 20% from the $1,599,626,000 in the six year plan last year (see Workbook at Tab 1 and here at 88 GAO).

The decline in investment for schools is approximately equal to the overall decline in proposed capital spending. SeeWorkbook at Tab 1.

The Mayor’s plan calls for $178 million new dollars for general repairs and upgrades to be done at multiple schools, and provides increases for the new Ward 4 and Ward 7 Middle Schools and for projects currently or about to be underway including Ellington, Garrison Elementary, DC Stars, Benjamin Murch Elementary, Hyde-Addison Elementary, Lafayette Elementary, Marie Reed Elementary, Roosevelt High and Watkins Elementary. See generallyWorkbook at Tab 2 (showing proposed investments by school (or function) in the proposed CIP as well as estimated full cost for projects in the proposed CIP and last years CIP and anticipated dates for completion).

As a rule, projects to be completed in FY16, FY17 or FY18 saw their anticipated costs increase, while schools to be completed in FY19 and later did not. See Workbook at Tab 2 Columns Q and R. The pattern of increases for schools in the near term reflects either systematic under estimation of costs in the past or rising construction costs or both.

The Pain

The Mayor’s proposed CIP pushes back the completion of the modernization of 10 schools by one year, 9 by two years, 7 by three years and 19 schools either fall out of the six year plan entirely, or in one case see their completion date move to outside of the six year period. 45 school communities see the date when they will enjoy a fully modernized school pushed back in some way under the proposed plan. SeeWorkbook at Tab 3.

With such numbers, clearly the pain will be felt widely, but illustrative examples include:

Orr Elementary in Ward 8, which has been rated the school most in need of a modernization not yet modernized or slated to start immediately, was postponed again despite the fact that the Mayor signed a pledge in May 2014 saying that she would “to fight for Orr’s modernization to begin immediately; and {would} hold accountable those who further delay modernizing the school.”

In Ward 6, despite a decade of work to strengthen the feeder pattern to Eastern High School, focused in recent years on the Middle Schools, parents saw the goal posts move again when the modernizations of Jefferson and Eliot Hine were put off for 3 years.

See the Workbook at Tab4 (showing the allocations for schools by Ward in the proposed CIP), Tab 5 (showing the total dollars available dollars for school by Ward in the proposed CIP. These figures include existing fund balances and unencumbered funds associated with projects in the Ward). Tab 6 (showing the changes in investment by Ward between last year’s CIP and the proposed CIP) and Tab 7 (showing the funds available for school modernizations thru FY18 (in the first three years of the six year CIP) by Ward.

The Constraint

Under current law, the CIP must adhere to the debt cap -- the requirement that the city pay no more than 12% of total expenditures in debt service. Under the proposed CIP, we reach 11.832% in FY19 and stay around 11.8% through FY21 (see Workbook Tab 8 and here at 6-6).

In the meantime, as described above, schools that are pressing forward saw their budgets increase. But the schools that are not immediately in the queue generally saw their estimated costs stay the same. See Workbook at Tab 2 Columns Q and R. If past is prologue, the cost of those later projects will be higher than currently estimated, putting further pressure on the debt cap.

The bottom line is that there is little headroom in our capital investment opportunities (absent changes in the law and/or public-private partnerships). As a consequence, if the criteria settled on by Chairman Grosso lead to calls for schools to be moved forward in the queue into the next three years, absent a change in the law or dollars added to the school modernization funding from other parts of the budget, other school projects will likely have to move back in the queue.

The Behemoth

The CIP proposes that we spend $178,475,000 to modernize Ellington in place at the site of the old Western High School (see here). Setting aside for now the longstanding question of whether it makes sense to modernize Ellington in place as opposed to more centrally locating a magnet school serving the city as a whole, the proposed cost requires careful consideration before proceeding. The modernized Ellington will serve approximately 600 students, so the investment will be on the order of $300,000 per student (even more per DC resident student since Ellington typically serves at least some students from Maryland and Virginia). The admittedly magnificent, proposed new Ellington (see here) will be 258,072 square feet (see here) and cost $692 per square foot.

To date, less than 1/5th of the Ellington dollars have been spent or encumbered, leaving over $150 million as a balance or proposed new investment. If we spend $150 million more on Ellington in the coming years that will represent more than 1 in 10 of the dollars we spend on school modernizations (including new investments and spending down existing balances and unencumbered funds) in the next six years, and close to 1 in 6 of the dollars spent on school modernizations in the next three years.

Unfortunately, the trajectory of the Ellington modernization is not atypical. Many projects have seen costs expand, and expand and there has been little scrutiny of how efficiently we are using our capital dollars on such projects. It is heartening that the DC Auditor is doing a review of the management of our school capital investments from FY 2010 through FY 2013 that should be released in a matter of months. Hopefully that review can result in recommendations that can improve the process going forward.

Sobriety Check

The investments we have made in schools to date have generally been magnificent. And, every community deserves to see a modernization like the one recently completed at Horace Mann Elementary School in Ward 3 (see here).

To get there, however, in a world of limited resources, it is imperative that we review our process to ensure that on every project taxpayers receive the full value of their investment and their tax dollars are used soberly. And, we need a coherent strategy to address needs as opposed to too often being at the whim of political demands.

For now, it will be essential to step back and consider whether the Ellington project (which represents over 27% of all dollars to be spent on individual schools in FY16) can be done at a significantly lower cost (or alternative funding can be found or the funding for school modernizations overall can be increased significantly to fund it).

If instead, our city leaders choose to plunge forward with the Ellington modernization as is, with no additions to the overall funding for school modernizations, and with the constraints of the debt cap, there should be no illusions, a significant number of other schools will have to wait years for their modernizations.

If that is the path chosen, the Mayor and the Council must own that decision.